According to Anne Kinsella of Teagasc, 2021 looks like it will be an even better year for sheep farmers than even 2020 was.
Speaking at the Teagasc Outlook for 2021 recently, Anne said that net margins on sheep farms are forecasted to increase by 23% in 2021 which would equate to an increase of €76/ha to €404/ha.
Anne’s presentation was based on a no-deal Brexit and on a mid-season lambing lowland enterprise. Only farms with greater than 20 ewes were included.
Additional analysis of the hill sheep sector will be published in the coming months, according to Anne.
Also Read: 'Lambs reared per ewe can increase from the current level of 1.39 to 1.55 by 2027'2020 has been a good year for sheep farmers across the country and this was duly noted by Anne who noted that this year, gross margins on lowland sheep flocks increased by 43% and jumped from €630/ha in 2019 up to €898/ha in 2020, on average.
Direct input costs are estimated to have increased by 1% in 2020, with concentrate feeding costs seeing the biggest rise – up 7% on 2019.
Gross output on sheep farms was also boosted by payments from the Sheep Welfare Scheme (SWS), according to Anne.
Growth of China
In her presentation, Anne mentioned the global situation of the sheep market and the ever-growing growth of the Chinese market.
She explained: “The global demand for sheepmeat has grown by 40% since 1990 up until 2019. Throughout this period, international trade has been dominated by Australia and New Zealand – which are the first and second largest sheepmeat exporters globally.
“In 2019 alone, Australia and New Zealand accounted for more than two-thirds of the value of global sheepmeat exports.
Furthermore, driving the global sheepmeat story further is the relatively new trader on the block in the sheep sector, China.
“The emergence of China continues to change the dynamic of the global sheepmeat market, as China is now the largest producer, consumer, and importer of sheepmeat.
“Increased exports of sheepmeat from Australia and New Zealand to China means that China is absorbing the sheepmeat supplies from these two countries which means there is less sheepmeat from Australia and New Zealand competing with Irish lamb – which is good for Irish sheep farmers.
“However, in the case of a no-deal Brexit, improvements in the lamb price in the EU may attract New Zealand lamb back into the EU market and this will very much depend on the EU price relative to China’s.”
2021 forecast
Looking to 2021, Anne said that 2021 looks like it will be an even better year for sheep farmers than even 2020 was.
She added: “The average gross margin earned in 2021 is forecasted to increase by 9% on average for mid-season lamb from the estimated figure of €898/ha in 2020 to €976/ha in 2021.
Margins will continue to be boosted as well by payments from the SWS. With increased output value and total overhead cost to increase marginally, net margins, per hectare, are expected to increase by 23% to €404/ha in 2021.
“Therefore, an increase in net margins from €328/ha [2020 estimate] to €404/ha in 2021 is forecasted. However, this is going to vary between the top, middle and lowest performing sheep farms.
“We are also forecasting that lamb prices will be stronger by 7% in 2021 as well, so it looks like next year will be a positive one.”